Dhruva Energy Systems (P) Ltd. Vs. Commr. of Cus. and C. Ex. - Court Judgment

Excerpt:
1. this is an appeal against the order-in-appeal no. 42/97, dated 28-2-1997, wherein the order-in-original no. 213/95, dated 15-9-1995 of the assistant collector of central excise has been upheld, wherein the modvat credit of rs. 35,683.75 had been disallowed on the ground that the invoices on which it was taken were not in conformity with the requirements of rule 52a(3)(ii) of central excise rules, 1944. the short point for consideration is that since in all copies of these invoices the words original/duplicate/triplicate/quadruplicate/had been printed and with these, the invoices were issued/the extra information was not deleted under proper signature and therefore, it was difficult to find out as to which was the original copy and which was the duplicate copy. the question to be considered is, is this merely a technical lapse or is this lack of substantive compliance of rule 52a.2. the appellants have vide their letter dated 16-11-1998 submitted that it would not be possible for them to attend the hearing granted by this tribunal and therefore, requested for disposal of the appeal based on merits on the basis of records.3. the appellants claimed that the said infirmity in these invoices on which they have taken credit is merely of technical nature and therefore, their substantive right for modvat credit should not be denied only on this ground. in support, they cited the cases of amal rasayan ltd. v. c.c.e. as reported in 1993 (67) e.l.t. 133 (tribunal), khosla cast steel & alloys pvt. ltd. v. c.c.e. as reported in 1989 (44) e.l.t. 691 and vijayalakshmi bottlers (p) ltd. v. c.c.e. as reported in 1991 (53) e.l.t. 105. they submitted that the defects in these invoices were of curable nature and there was no lack of information but only extra information had been left on them.4. the learned sdr stresses that the marking of each copy of invoices with the legend original or duplicate or triplicate etc. is mandatory as per rule 52a, because the words used are "shall". this should not be treated as merely a technical lapse, as has also been observed by the learned commissioner (appeals) in the order impugned because in such a case, the invoices not being distinguishable as to which one is the original and the duplicate copy thereof, any other manufacturer would be in a position to take credit thereon. he stresses that the case law cited by the appellants is with respect to other technical violations and not specific to this aspect prescribed as mandatory by rule 52a and therefore, stand distinguished on facts. if this mandatory requirement is also brushed aside on the ground of being a technical requirement/lapse, then this will establish precedent whereby the revenue will be in danger as it could not be possible for the field officers to verify whether more than one, assessee has taken credit on the said invoices. therefore, the said prescription under rule 52a stands on a different footing and is very basic in nature to the pattern of control to be exercised under central excise rules, 1944.5. i have carefully considered the arguments as well as records of the case. it is hot disputed in this case that all the copies of the invoices in question bore legend of original, duplicate, triplicate etc. it is clear from the manner in which they have been used that the assessee who has issued these invoices has not taken due care and diligence to use invoices which would not result in any confusion between which was the original copy, which was the duplicate copy etc.i find that to regard this merely a technical lapse would be over simplifying the matter. this is because the duty paying documents on which modvat credit should be taken is required to be of a specific nature and not one which can lead to ambiguity or alternative interpretations. in this case, as the learned commissioner (appeals) has also observed in the order impugned, it is impossible to distinguish between which is the original or the duplicate copy and therefore to ensure that more than one assessee does not take modvat credit on the strength of these documents. i find that this risk should be viewed and appreciated in the light of the fact that modvat credit scheme now also provides facility for endorsement of such duty paying documents to another buyer. the requirements of rule 52a in respect of such marking by using the words "shall" cannot be brushed aside lightly, otherwise, this would create a dangerous precedent and endangering revenue by instituting a situation precedent, leading to lack of control and verification viewed in this light, i do not find it possible to accept the submissions of the appellants that merely because this is curable defect and merely because some extra information as contained therin, therefore, modvat credit cannot be denied. while it is true that mere simple technical lapse should not be allowed to come in the way of the assessee enjoying modvat credit otherwise will be available, i find that the facts of this case are not in the nature of mere technical lapse because of the reasons discussed above, particularly the word shall in rule 52a.6. i therefore, find that there is no merit in this appeal which compells me to interfere with the order-in-appeal impugned. the appeal is, therefore, dismissed.

Judgment:
1. This is an appeal against the Order-in-Appeal No. 42/97, dated 28-2-1997, wherein the Order-in-Original No. 213/95, dated 15-9-1995 of the Assistant Collector of Central Excise has been upheld, wherein the Modvat credit of Rs. 35,683.75 had been disallowed on the ground that the invoices on which it was taken were not in conformity with the requirements of Rule 52A(3)(ii) of Central Excise Rules, 1944. The short point for consideration is that since in all copies of these invoices the words original/duplicate/triplicate/quadruplicate/had been printed and with these, the invoices were issued/the extra information was not deleted under proper signature and therefore, it was difficult to find out as to which was the original copy and which was the duplicate copy. The question to be considered is, is this merely a technical lapse or is this lack of substantive compliance of Rule 52A.2. The appellants have vide their letter dated 16-11-1998 submitted that it would not be possible for them to attend the hearing granted by this Tribunal and therefore, requested for disposal of the appeal based on merits on the basis of records.

3. The appellants claimed that the said infirmity in these invoices on which they have taken credit is merely of technical nature and therefore, their substantive right for Modvat credit should not be denied only on this ground. In support, they cited the cases of Amal Rasayan Ltd. v. C.C.E. as reported in 1993 (67) E.L.T. 133 (Tribunal), Khosla Cast Steel & Alloys Pvt. Ltd. v. C.C.E. as reported In 1989 (44) E.L.T. 691 and vijayalakshmi Bottlers (P) Ltd. v. C.C.E. as reported in 1991 (53) E.L.T. 105. They submitted that the defects in these invoices were of curable nature and there was no lack of information but only extra information had been left on them.

4. The learned SDR stresses that the marking of each copy of invoices with the legend original or duplicate or triplicate etc. is mandatory as per Rule 52A, because the words used are "shall". This should not be treated as merely a technical lapse, as has also been observed by the learned Commissioner (Appeals) in the order impugned because in such a case, the invoices not being distinguishable as to which one is the original and the duplicate copy thereof, any other manufacturer would be in a position to take credit thereon. He stresses that the case law cited by the appellants is with respect to other technical violations and not specific to this aspect prescribed as mandatory by Rule 52A and therefore, stand distinguished on facts. If this mandatory requirement is also brushed aside on the ground of being a technical requirement/lapse, then this will establish precedent whereby the revenue will be in danger as it could not be possible for the Field Officers to verify whether more than one, assessee has taken credit on the said invoices. Therefore, the said prescription under Rule 52A stands on a different footing and is very basic in nature to the pattern of control to be exercised under Central Excise Rules, 1944.

5. I have carefully considered the arguments as well as records of the case. It is hot disputed in this case that all the copies of the invoices in question bore legend of original, duplicate, triplicate etc. It is clear from the manner in which they have been used that the assessee who has issued these invoices has not taken due care and diligence to use invoices which would not result in any confusion between which was the original copy, which was the duplicate copy etc.

I find that to regard this merely a technical lapse would be over simplifying the matter. This is because the duty paying documents on which Modvat credit should be taken is required to be of a specific nature and not one which can lead to ambiguity or alternative interpretations. In this case, as the learned Commissioner (Appeals) has also observed in the order impugned, it is impossible to distinguish between which is the original or the duplicate copy and therefore to ensure that more than one assessee does not take Modvat credit on the strength of these documents. I find that this risk should be viewed and appreciated in the light of the fact that Modvat credit scheme now also provides facility for endorsement of such duty paying documents to another buyer. The requirements of Rule 52A in respect of such marking by using the words "shall" cannot be brushed aside lightly, otherwise, this would create a dangerous precedent and endangering revenue by instituting a situation precedent, leading to lack of control and verification viewed in this light, I do not find it possible to accept the submissions of the appellants that merely because this is curable defect and merely because some extra information as contained therin, therefore, Modvat credit cannot be denied. While it is true that mere simple technical lapse should not be allowed to come in the way of the assessee enjoying Modvat credit otherwise will be available, I find that the facts of this case are not in the nature of mere technical lapse because of the reasons discussed above, particularly the word shall in Rule 52A.6. I therefore, find that there is no merit in this appeal which compells me to interfere with the Order-in-Appeal impugned. The appeal is, therefore, dismissed.